Case Study: Value for Money?
White Maund met the directors of a call centre late on a Thursday evening to discuss the options available to the company. As a consequence of the global recession and low-cost competition from India and the Far East, the company had experienced a significant downturn in trade and had accrued liabilities due to a lack of cash flow, notably a significant debt to HM Revenue & Customs.
Negotiations with a third party who had shown interest in purchasing the business had fallen through and whilst the landlord of the company’s premises had offered a three-month rent reduction unless further finance could be found, there was no prospect the company could continue to trade.
The directors had consulted with a mid tier firm of Insolvency Practitioners who had been introduced by the company’s bankers however the firm declined to assist as there were insufficient funds available to meet their basic costs of dealing with the potential liquidation of the company, particularly bearing in mind there were in excess of 350 employees’ claims to deal with.
The directors met with the company’s bankers the following morning and were advised that the bank would not provide any further funding and as a consequence, the directors concluded that there was no option other than to liquidate the company. We attended the premises and formulated our strategy to maximise realisations and to deal with the redundancy of the employees, who were further distressed as wages had been due to be paid that day. We provided the employees with a pack of information and involved the Benefits Agency and Jobcentre so as to minimise the impact and our efforts were rewarded as many employees thanked us for making the process as painless as possible and enabling them to obtain payments from the Redundancy Payments Service at the earliest opportunity.
We retained two employees from the IT department for a period of six weeks to gather the data for the company’s clients in order to protect the value of outstanding debts due to the company. As a consequence, after a significant amount of negotiation with the clients, we were able to recover approximately £500k of book debts enabling the company’s bankers to be paid in full and for there to be sufficient funds for us to make a distribution to the employees and Redundancy Payments Service in respect of preferential claims in the liquidation.